The Missouri Department of Revenue (DOR) issued a letter ruling stating that a utility company should not charge sales tax to hotels, motels and other transient accommodation establishments for sales of utilities. Specifically, sales tax should not be charged for sales of utilities used to heat, cool, or provide water or power to the guests’ accommodations of such establishments, including sleeping rooms, meeting and banquet rooms, and any other customer space rented by guests, and which are included in the charge made for such accommodations. However, the utility company should charge sales tax for sales of utilities used in common areas.
Prior to the passage of S.B. 745 during the 2022 legislative session, sales of utilities to these types of establishments were subject to sales tax. S.B. 745 added sales of utilities to these types of establishments to the list of exclusions from sales tax. Since S.B. 745 added this exemption, exemption certificates are no longer required to be retained by the seller. The DOR stated in the letter ruling that the utility company can accept in good faith utilities studies presented by hotels, motels, or other transient accommodation establishments that show what percentage of utilities are used to heat, cool, or provide water or power to the guests’ accommodations of such establishments, including sleeping rooms, meeting and banquet rooms, and any other customer space. (LR 8221, Missouri Department of Revenue, November 23, 2022)